Amid growing interest in private trust companies as an alternative to single family offices, which may become subject to SEC registration, the authors outline the types, popular venues, and key benefits of private trust companies for wealth owners.
Valuation-tilted investment strategies offer many benefits of cap-weighting – broad diversification, low costs, transparency and modest turnover – plus the benefit of the value-premium phenomenon. And unlike traditional passive approaches, these strategies incorporate all stocks, differentiate across the valuation spectrum, and respond to changes in valuation dispersion.
Studies show that "emerging" hedge fund managers tend to outperform their larger, more established brethren. However, this additional alpha should not blind investors to the need for proper operational due diligence, say the authors, who suggest practical tips to ensure meaningful due diligence and risk mitigation.
Researchers demonstrate that a portfolio with a specific beta constraint can be improved by moving toward a leveraged bond position. When that is permitted, replacing a specific beta target with an acceptable "beta range" adds the flexibility needed to achieve even better returns.
Now is a good time for not-for-profit organizations to clean their gift closets by assessing endowment funds. This can help to keep funds from being misapplied, identify funds that are dormant due to donor restrictions, and reveal uses that could be applied to new organization initiatives. Check the documentation and review the terms of each gift.
The second quarter played out close to expectations with weak market returns, few unanticipated shocks, and investor worries never escalating to panic. Expectations for capital market returns are now lower, although emerging markets offer growth for patient investors, real assets are a hedge against further monetary devaluation, and the environment seems ideal for fundamental long/short equity positions.
The U.S. economy lacks clear drivers of sustained growth, and there is no "quick fix" for the housing and structurally high unemployment situations. While there is much debate about what the federal government can and cannot do to change this dynamic, it is hard to see any real solution other than a gradual, often volatile recovery pattern over several years.
As we progress through market recovery, investors need to take into account three potentially historic market challenges: the end of the Federal Reserve's QE2 and the possibility of a QE3; Japan's problems of demographics, debt and natural disaster; and the sovereign debt problems of Greece, Ireland, and Portugal.
It may be difficult for consumers to sustain current spending levels given the sticker shock of prices at the pump. Add to the mix a move higher in interest rates, cuts in unemployment benefits and other services, and a restructuring of the Social Security and Medicare/Medicaid system as we know it, and it would seem the downside risks to growth are mounting.
There is no simple solution to measure the overall risk of a security or portfolio with one statistic. The author recommends that investors use a variety of measures, including spread duration, rating breakdowns, and the average price of securities in each rating category.